On 19 September 1992, an indicative referendum was held on whether to keep the existing FPP system or change to a new system, and if the system was changed, which system should replace FPP. By an overwhelming majority, 84.7% voted to change the system, and 70.5% chose MMP as the replacement system.[4]

A second binding referendum was held alongside the 1993 general election on 6 November 1993, asking voters to choose between changing to MMP and keeping the existing FPP system. The final result much closer than in 1992, with MMP winning the referendum 53.9% to 46.1% (1,032,919 votes to 884,964).[4]

The first general election under MMP was in 1996. The 2011 general election was the sixth taken under this system.

A New Zealand MMP election gives the voter two votes: one for a party and one for the person they want to represent their electorate. The party votes determine what share of the 120 seats each party gets in Parliament, and the percentage of votes a party gets is ideally proportional to the percentage of seats the party gets. For example, if a party gets 25% of the votes, then they get 25% of the seats (i.e. 30 seats) more or less. A party qualifies for seats only if it passes the electoral threshold – one electorate seat or 5% of the party vote – so the number of seats a party gets may not be fully proportional to the votes (e.g. in 2008, the National Party got 44.93% of the votes and 47.54% of the seats; and while ACT got 3.65% of the votes and 5 seats, New Zealand First got 4.07% of the votes but no seats as they did not win an electorate seat).[5]

Seventy electorate MPs are elected, one from each of the 70 electorates across New Zealand, using first past the post (one vote; highest number of votes wins). These MPs fill their party's share of the seats first. A party may win more electorates than seats it is entitled proportionally, resulting in one or more overhang seats and increasing the size of Parliament, as happened with the Maori Party in 2005 and 2008. Any seats vacant after a party has allocated its electorate seats are filled by MPs from the party's list.[5]

During the 2008 general election campaign, the National Party promised that if elected to Government it would hold a referendum on the voting system no later than 2011. National was of the view that it was time for the voting public to review the way they elected representatives.[6] All the major political parties agreed with holding a referendum, although the Labour Party and the Green Party criticised the lack of an independent review of MMP before the referendum. They were of the view that National had a hidden agenda to replace the proportional MMP system with the semi-proportional Supplementary Member (SM) system, which has been described by Labour Christchurch East MP Lianne Dalziel and Green co-leader Metiria Turei as "first-past-the-post in drag".[6] In the referendum legislation it was announced by Amy Adams, MP for Selwyn and Chair of the Electoral Legislation Committee, that she did not believe the National Party would campaign in the referendum and instead suggested that "The whole purpose of this bill is for New Zealanders to make that decision"[7] and this view has been reaffirmed so far at National Party regional conferences.

On 20 October 2009, Justice Minister Simon Power announced that a referendum on the voting system would be held alongside the 2011 general election.[8]

The Electoral Referendum Bill to legislate the referendum was introduced to Parliament on 25 March 2010, and passed all three readings unanimously. The bill received its Royal Assent and became the Electoral Referendum Act 2010 (Public Act 2010 No 139) on 20 December 2010.[9]

In the original version of the bill, there was no advertising spending limits. At the Select Committee stage, a $12,000 spending limit for unregistered promoters and a $300,000 spending limit for registered promoters was added in response to public consultation to "level the playing field", to "protect the integrity" of what is a constitutionally significant referendum, and to prevent wealthy individuals from influencing the outcome.[10] This largely came from the original 1993 referendum legislation not having spending limits, allowing the anti-MMP Campaign for Better Government (CBG), which was backed by a large business lobby, to spend an estimated $1.5 million in advertising compared to the pro-MMP Electoral Reform Coalition's $300,000.[11] The limits were also designed to match the new spending limits by third parties in general elections, which were introduced by the Electoral (Finance Reform and Advance Voting) Amendment Act 2010 that commenced at the same time as the Electoral Referendum Act on 1 January 2011.

Other amendments were proposed at Select Committee and Committee of the House but were not passed. The ACT Party proposed including a third question on whether to retain or remove the separate Maori seats (rejected due to a clause in the confidence and supply agreement between the National and Maori parties[12]) and to increase the registered promoter spending limit to $500,000 or $750,000. The Labour and Green parties proposed holding the review of the MMP system regardless of the referendum results.[10][13]

When voting in the 2011 general election, voters received a purple referendum ballot paper in addition to their normal orange voting paper. The ballot paper asks two questions. Voters could choose to answer both questions, only one of the questions,[14] or neither question. Once the voters made their choice, the referendum ballot paper was deposited in a separate purple-coloured ballot box under their respective electorates.

The first question is "Should New Zealand keep the Mixed Member Proportional (MMP) voting system?" The options provided are:

First past the post – There are 120 electorates across New Zealand electing one MP each, and each voter votes for a candidate in their local electorate. The candidate with the highest number of votes in that electorate is elected the MP for that electorate. This system was used for general elections in New Zealand prior to 1996, and is still used under the MMP system today to elect electorate MPs and conduct by-elections. It is also used by all regional councils and the majority of city and district councils. Countries using this voting system include Canada, the United Kingdom, and the United States.

Preferential voting – Also known as instant-runoff voting (IRV) and alternative vote (AV). There are 120 electorates across New Zealand electing one MP each, and each voter ranks the candidates in their local electorate by order of preference, starting with 1 for their most preferred candidate. Using transfer of votes and elimination of candidates, one candidate will receive an absolute majority (50%+1) of the votes, and subsequently is elected the MP for that electorate. This system is used for electing mayors of some New Zealand city and district councils, including Dunedin and Wellington City. Countries using this voting system include Australia (lower house).

Single transferable vote – Voting is similar to preferential voting in that voters rank candidates on order of preference, with the major difference is that there are only around 40 electorates across New Zealand, returning three to seven MPs each. Using transfer of votes and elimination of candidates, the candidates with the majority of the votes are found and elected MPs for that electorate. This system is used by all district health boards to elect councillors, and is also used in multi-member wards of some city and district councils, including Dunedin and Wellington City. Countries using this system include Australia (upper house) and the Republic of Ireland.

Supplementary member – Also known as parallel voting. Each voter receives two votes: one for a party and a one for their local electorate MP. In each of the 90 electorates across New Zealand, the local MP is elected using first past the post, and the candidate with the most votes is elected the MP for that electorate. In addition to the 90 electorate MPs, 30 list MPs are elected at-large using the party vote, with the proportion of the 30 seats a party gets being determined by the proportion of the party vote – if a party gets 30% of the party votes, it gets 30% of the list seats (i.e. 9 seats). It has never been used in New Zealand. Countries using this system include Japan and South Korea.

If the voters voted in majority to keep the existing MMP system, then the system would be retained. Also under the Electoral Referendum Act, if the majority of voters voted to keep MMP, then an inquiry into the MMP system would automatically be undertaken by the Electoral Commission to see if any modification is desirable, including to thresholds (currently a party needs 5% of the party vote or one electorate to get seats in Parliament), the order of candidates on party lists (the inability of voters to rank list candidates in order of preference), proportionality (overhangs, and the effects of population change on the number of general electorate seats), and dual candidacy (electorate candidates also running as list candidates).[10]

There were calls from the Labour and Green parties, and even the opposing Vote for Change group,[16] to hold the review of MMP regardless of the result of the referendum to iron out problems in the current system before it goes to the second referendum.

If the voters voted in majority to change to another electoral system, then the government following the 2011 election could call a second referendum to be held on or before the next general election[2] (which assuming the 2011 election is held on 26 November, would have to occur on or before 31 January 2015b). This second referendum, like in 1993, would allow voters to choose between the MMP system, and the alternative system that received the most votes in the 2011 referendum. The system that received the majority in the second referendum would become the voting system for the following general elections.

The Electoral Commission started its information campaign in late May 2011, sending out information on the voting process with its enrollment update campaign. It has launched a website, with information on the five voting systems.

On the decision for which voting system to vote for, the Electoral Commission said that no voting system is perfect, each system has its advantages and disadvantages, and it is up to the voters to decide. It did pose five questions for people to consider answers to on selecting a voting system:[17]

Does the electoral system translate votes into seats reflecting the share of votes won by political parties?

Does the electoral system produce parliaments able to represent and reflect the views of Māori, different ethnic groups and geographical regions, women and minorities?

Does the electoral system produce stable governments able to fulfil their responsibilities?

Does the electoral system produce parliaments able to scrutinise the actions and policies of governments?

Does the electoral system allow voters to hold MPs and the government accountable?

The Green Party "welcomed" the referendum proposal, but argued for the questions to be written by an independent body,[20] and to have spending limits on the campaign.[21] The party supports the retention of MMP, saying it is a fair and representative system.[22] Its late co-leader Rod Donald was a major advocate for the implementation of MMP in 1992/93, with the former co-leader alongside Donald, Jeanette Fitzsimons, saying the implementation of MMP was his greatest legacy.[23]

MMP has led to parties holding power over MPs, and voters can't easily hold government and MPs accountable[28]

The current configuration allows MPs voted out by their electorate to re-enter parliament via the party list (the "backdoor") [28]

Smaller parties currently hold a disproportionate amount of power in forming governments.[28]

There should be more certainty to voters in government formation more of the time, rather than having to wait for post-election negotiations.c[28]

Governments should be held to their promises, rather than having to compromise on promises in coalition and confidence-and-supply agreement.c[28]

There are too many list MPs serving the party executive rather than being accountable to the voting public.[28]

There needs to be a proper debate - the 2011 referendum will be lost in the excitement of the 2011 Rugby World Cup (which New Zealand hosted between 9 September and 23 October), so voting to change will allow a proper debate to take place at the second referendum.[28]

Voting for MMP will allow MPs to manipulate any changes to the system to their own benefit.[28]

Peter Shirtcliffe, who campaigned against MMP in the 1992/93 referendums, has again supported campaigning against MMP. In April 2010, he and the late Graeme Hunt launched the Put MMP to the Vote campaign to advocate for the removal of MMP and its replacement with Supplementary Membership. However in the announcement, he sent mixed signals on his opposition to MMP when he said that "Supplementary Membership already operates successfully in the Scottish Parliament and the National Assembly for Wales" - both legislatures actually use a variant of MMP and not SM.[29] Shirtcliffe has also attacked the referendum process as flawed and called for a quicker second round of votes to allow any electoral system to be in place before the next general election, preferential voting on alternative voting systems and a question on the reduction of Parliament seats from 120 to 100.[30]

To prevent the delay of general election results, preliminary counts of the referendum results did not take place at polling places – instead the referendum ballot boxes were to be unsealed, inspected, packaged and sent to the Returning Officer of the electorate for an official count.[46] Advance referendum votes were to be counted by the Returning Officers on election night, once he/she has completed the count of the advance election votes, and was to be released gradually on election night. In total, over 330,000 advance votes were cast,[47] around 11% of the total New Zealand electorate.[48] The official results, including all special votes, were released on 10 December 2011.[49]

In Part A, 57.8 percent of valid votes were in favour of keeping the MMP system, with 42.2 percent in favour of change. Around three percent of the votes were informal. Compared to the 1993 referendum, there was a 3.9 percent increase in support for the MMP system.

In terms of electorates, 56 voted in majority to keep MMP while 14 voted in majority to change system. The seven Maori electorates had the largest votes in favour of keeping MMP, with Waiariki having the highest percentage in favour - 85.5 percent. Clutha-Southland had the highest percentage in favour of change - 55.4 percent.

^b The writs of election for a 26 November election are returnable on 15 December 2011. Under the Electoral Act 1993, if not dissolved earlier, Parliament will dissolve automatically three years to the day afterwards (15 December 2014), and an election must be held on a Saturday within the next 57 days (i.e. before 10 February 2015). As the Saturday 7 February falls on a long weekend due to Waitangi Day on Friday 6 February, the last possible day is Saturday 31 January 2015.

^c This is provided that there are no hung parliaments. One analysis shows, of the five general elections since MMP was introduced, there have been two elections where if the election was held under SM or FPP the parliament would have been hung: one in 1996 and the other in 2005.[51]